How to trade Bitcoin and other Crypto Currencies Using Bollinger Bands?

In that case your noise is its own random walk. Separate threads about exchange issues will be removed. Identifying a trend in the making is an art form, as trends formation is subtle in the early stages. That being said, I would definitely be interested in hearing any rationale for Bollinger Band usage based on sound first principles. If volatility got too much crazier, it would have dragged the band back to negative infinity again. Popular Wallets Ledger Wallet. This way, you always calculate the recent volatility as a percentage of the current mean, and you multiply or divide things by this percentage to get the bands.

Bollinger Bands are a form of trading band or envelope driven by volatility that define whether prices are relatively high or low. Using that information traders can build rigorous trading systems that take the emotions out of the decision process.

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When the market is quiet, the bands contract and when the market is LOUD, the bands expand. Notice on the chart below that when price is quiet, the bands are close together. When price moves up, the bands spread apart. One thing you should know about Bollinger Bands is that price tends to return to the middle of the bands.

If you said down, then you are correct! As you can see, the price settled back down towards the middle area of the bands. What you just saw was a classic Bollinger Bounce. The reason these bounces occur is because Bollinger bands act like dynamic support and resistance levels.

The longer the time frame you are in, the stronger these bands tend to be. Many traders have developed systems that thrive on these bounces and this strategy is best used when the market is ranging and there is no clear trend. When the bands squeeze together, it usually means that a breakout is getting ready to happen.

Looking at the chart above, you can see the bands squeezing together. As Bitcoin' attempts to reverse and form a bullish move, these initial swings hardly ever pan out. Everyone is now talking about short interest, but most do not understand how markets work and the flow of money. So they put up long and short Stoploss if Bitcoin break up RSI 89 is also approaching resistance and a reaction Remember that our last idea about second chance to long BTC?

But BTC is still move beneath the blue trendline. TP2 N TP3 need it to break that trendline. Then btc can get its I apologize, I got it all wrong. The bears failed completely, they didn't manage to reach our strong support. While we were expecting a strong retrace. I am extremely happy to be able to say sorry and admit that I was wrong.

So now we reverse short term and go on another Definition trend and change of trend Trend reversal Downtrend - Definition A downtrend comprises a repeating sequence of: RSI 89 is also seeing a bearish exit and we might see a corresponding drop in Like You see on the 1h timeframe, today BTC' got a "panic" candle. After the drop, the price bounced upwards from the two counter trendlines:

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TL;DR, Bitcoin is so volatile it screws up Bollinger bands on large timescales. If you're using Bollinger bands, use these ones instead (mathematical details in comments). Pictures are . bitcoinwisdom — Check out the trading ideas, strategies, opinions, analytics at absolutely no cost! This is the hub for everything about Bollinger Bands. Educational videos and articles, the Bollinger Band Letter, Bollinger Band Tool Kits. John Bollinger's boo.